Telecoms Revolution: The Best Is Yet To Come

By Adebola Ojikutu

Since its inception, privatisation, deregulation and liberalisation in 1999, Nigeria’s telecom sector has made monumental progress and contributions to the nation’s economy. From a mere 1 percent and less than a million analogue lines as at 2001, there has evolved an escalation to about 170 million connected and 128 million active mobile and fixed telephone lines, bringing teledensity to about 91 percent of the total population.

The sector has attracted about $30 billion in foreign direct investment with an average 15 percent growth per annum in the last decade. It has created about ten thousand direct and an estimated two million indirect jobs while opening up various channels and windows of opportunity for small and medium scale entrepreneurs.

To be added to these are the array of infrastructure such as submarine cables, base stations, and other ancillary equipment that have been deployed across the country and the opening up of semi-urban and rural areas.

Based on its contributions to the GDP, the telecoms sector in Nigeria is full of promise in the foreseeable future. This much was reflected by the Director of Public Affairs of the Nigerian Communications Commission, NCC, Mr. Tony Ojobo during a conversation. The sector inputs 28.6 percent, equivalent to N6.97trillion ($44.3billion) of the total GDP estimate of N80.22trillion to Nigeria’s gross domestic product, GDP. Thus, telecoms have become the largest non-oil contributor the nation’s economy.

The implication of this is that investors will continue as they have done before, to direct attention at the sector which presents opportunities for them to make the best of their investments. Part of the initiatives towards the consolidation of the industry is making available the 3.5 GHz spectrum band in 27 states and the Federal Capital Territory for sale to the public. Each of the states will get 25 MHz bandwidth, except for Abuja the FCT which would be allocated the 20 MHz bandwidth.

According to the NCC, “the spectrum is expected to be licensed on a state by state basis in the states where it is available, which means that winners of the spectrum license will operate within the state or states where the license is situated.” These initiatives taken in collaboration with the Ministry of Communications Technology will not only sustain growth in the industry, but also drive growth in new sectors.

The sector’s investment inflow as well as its positive impact on other sectors such as agriculture, commerce and industry, oil and gas, small and medium enterprises, information, and education, is therefore difficult to quantify.

Side by side with growth is also the expansion being witnessed as new entrants make inroads into the market. It would be recalled that the NCC had on February 19 this year, auctioned the 30MHz slot of the 2.3GHz spectrum to Bitflux Communication Limited, a consortium of three companies which beat Globacom in the race for the license.

Ojobo also disclosed that seven new infrastructure companies are to be licensed – two before the end of May, 2014, and another five before the end of the year in order to strengthen broadband infrastructure rollout. He emphasized the fact that the open access model – which is based on a non discriminatory price regulated basis (meaning that no particular network has the sole ownership of infrastructure), will be operated. The infrastructure companies will provide infrastructure into which operators can plug in to provide services.

The rebased GDP has provided an amplified basis for assessing telecoms impact on the real economy. There is now for the first time, official figures in place of the previous estimates and guesses largely proffered by industry experts. Possibilities for further growth are rife considering that the exploration of broadband services is just about to begin.

The rising demand for data services cutting across the public and private sectors and individuals, holds big prospects for the sector and potential investors.  International data bandwidth in Nigeria is reported to have increased by about 26 times to more than 9,000 gigabits per second over the past four years. The rise in internet subscriptions indicates that there is increasing demand for data-enabled services.